Bluebird customers now can have Social Security checks,
military pay and other government benefits deposited directly
into their accounts. The change eliminates delays for those who
previously had to wait for government checks to clear since
federal agencies are prohibited from wiring money to accounts
that aren’t protected by the Federal Deposit Insurance Corp.

Many of Wal-Mart’s 140 million weekly customers are
soldiers, and they “weren’t allowed to get their military pay
directly deposited to an account like Bluebird,” Daniel Eckert,
the retailer’s vice president of financial services, said in an
interview. Military and other customers who receive government
checks asked for direct deposit, “so we immediately started
working on that,” he said.

Bluebird customers, now exceeding 575,000, loaded more than
$275 million onto their accounts since the product was
introduced in early October through the end of January, Dan Schulman, 55, president of enterprise growth at New York-based
AmEx, said in an interview.

“Whether you were unhappily banked or unbanked, we are
able to deliver some traditional banking services in
untraditional ways,” he said.

Customers also can write checks with their Bluebird
accounts starting today. The service is designed to avoid
overdraft fees by requiring customers to clear checks ahead of
time through their mobile phones and write an authorization code
on the check.

Won’t Bounce

“You know you’re not going to bounce that check because
you know it’s already cleared,” Schulman said. “You don’t have
to worry about balancing your check book because it’s already
come out of your account.”

Wal-Mart is further capitalizing on its push for Congress
to cap debit-card “swipe” fees charged to merchants, a Dodd-
Frank Act provision that has cut annual revenue at the biggest
U.S. banks by about $8 billion. The payments industry predicted
that lenders would impose checking-account fees in response to
the legislation, pushing lower-income consumers out of the
banking system.

Most reloadable prepaid cards, including Bluebird, are
exempt from Dodd-Frank’s debit restrictions. The agreement with
Bentonville, Arkansas-based Wal-Mart helps American Express
expand beyond its core credit- and charge-card business and
drive more spending to its global payments network. Targeting
Wal-Mart customers contrasts with AmEx’s historic focus on
affluent consumers.

Wal-Mart’s U.S. division abandoned plans to start its own
bank in 2007 amid opposition from financial-services companies
and lawmakers. At the time, the retailer’s application to open a
so-called industrial bank in Utah would have enabled it to
process credit- and debit-card transactions internally.